UPDATE 2-BMO says to build presence in U.S. Midwest

* Bank sees more savings from Marshall & Ilsley deal

* Reiterates $1 bln U.S. profit goal

* Targets five U.S. Midwest cities for growth

June 26 (Reuters) - Bank of Montreal plans to build
on its 2011 acquisition of Wisconsin lender Marshall & Ilsley in
five key markets in the U.S. Midwest, and said the 2011
acquisition will yield more annual cost savings than previously
thought.

Speaking at an investor presentation in Chicago, bank
officials said the $4.1 billion deal should yield annual savings
of at least $400 million -- up from the previous target
somewhere above $300 million a year.

BMO, which doubled the branch count of its U.S. Harris Bank
unit with the acquisition, also reiterated its medium-term goal
of profit of more than $1 billion from its U.S. retail and
wealth business.

The bank, which initially unveiled the target in March 2011,
expects to achieve the goal in three years.

Canada's big banks are not permitted to merge with each
other and so have looked to international markets to find
growth. BMO and Toronto-Dominion Bank both boast large
retail bank networks that they expect to benefit from a
recovering U.S. economy.

With the M&I deal, BMO now has 663 U.S. branches and is the
No. 3 bank in the U.S. Midwest by branch count, trailing U.S.
Bancorp and JPMorgan Chase & Co.

The bank is targeting growth in Chicago, Indianapolis,
Minneapolis, St. Louis and Kansas City, through both organic
growth and acquisitions, according to the presentation.

It plans to close 24 branches, 17 of which are in Wisconsin,
due to overlap between M&I branches and BMO Harris branches, a
spokesman said on Monday.

BMO, Canada's No. 4 bank by assets, has about 900 branches
in its home country. The bank's shares were up 21 Canadian cents
at C$54.93 in late-morning trade on the Toronto Stock Exchange.